Poor old John Redwood. He is upset at the way that the BBC treats him compared with our very own Vince Cable. On his blog he complains that the BBC are nicer to Vince than to him.
But let’s be clear here. Ming has made Vince our Shadow Chancellor. David Cameron has not appointed John to any position in his cabinet.
Do we really think that the Tories want to see John Redwood on television more often, treated with the respect that he thinks he warrants?
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20 Comments
Unless Vince Cable has defected to the Conservatives and been given a job, he is not anyone’s Shadow Chancellor. He is your main economic spokesperson.
If we want to call him the Liberal Democrat Shadow Chancellor we can, it’s a free country. What rule is there to stop us?
On a serious note, Redwood complains about coverage yet I suspect that Cable would have given his right arm for the week of free air time that Redwood was given over the launch of his Competitiveness Working Group report compared to Vince’s Tax Reform report also published in the summer. Yet another Tory who who is obsessed with how hard done by he is. Clearly he’s been taking lessons from Arch Whinger Gideon Osborne.
James – If you can call anyone what you want why not go for something abit more imaginative, Ming could be Imperial Emperor and maybe Cable could be Grand Inquisitor. Other suggestions welcome.
Will, whilst James is entirely correct, if the website of Parliament calls someone a Shadow Chancellor, it’s good enough for me.
Frankly I don’t think any of the LibDem leadership are particularly credible.
The Tories and Labour are intellectually bankrupt. They have abandoned their core philosophies in preference for expediency and are left stealing other parties ideas, in particular, liberal ones.
The leadership should be going in with heavy boots, breaking egos and asserting the Liberal philosophy as the dominant one. There are no other credible ideas out there. Instead, all I hear is hand waving and waffling.
If the Conservatives knew what was good for them (which they hardly ever seem to), they would lock up John Redwood and throw away the key.
Laurence, have you actually had any dealings with John Redwood, or read any of his writing, or are you basing this opinon entirely on what you have heard in the media? Just because he takes a different angle on liberalism to you (e.g. he thinks that personal freedoms should be applied to the economic sphere too) should be no reason to damn him as you do.
John, that’s a legitimate point of view. Except of course that its nonsense.
Redwood doesn’t believe if economic freedoms, at least not for all. In his paper on economic competition he cited scrapping IHT as a way of increasing competition. Not lowering income tax, where he may have had a point, but on scrapping IHT.
His policies are geared towards allowing people to accumulate unearned wealth and keep as much of it as possible, while clobbering those of us without assets with user charges and regressive taxes like VAT.
That isn’t economic liberalism; it is economic protectionism for the elite. We might just as well be fighting the old Liberal / Conservative battles of 1909 or the Whig / Tory battles of the 1820s.
“Do we really think that the Tories want to see John Redwood on television more often, treated with the respect that he thinks he warrants?”
If by “Tories” you mean “Tory members”, then the answer is assuredly “YES”. Redwood speaks for them.
But I have one caveat. The devoutly Christian Redwood blotted his copybook by having an affair and leaving his wife. For most Tories, this is unpardonable. Extra-marital sex is permissible only for the aristocracy, not minor public school people like Redwood.
Personally, as a Lib Dem supporter, I am all in favour of John Redwood being on TV.
More John Redwood, say I.
It strikes me as the easiest way to bring a swift end to any alleged Tory recovery.
Hey, thanks for helping me out there James. I was basing my view purely on his resemblance to a Vulcan.
James,
Well, what he said was “What taxes like capital gains tax, corporation tax and inheritance duties really do, in the end, is squeeze the aggregate stock of capital in the country that levies them, with unambiguously negative implications for long run consumption, output and wages. And in the globalised world where capital can be moved over borders, “in the end” can mean “rather quickly”, as Ireland’s experience suggests.”
So which bit of this would you take issue with?
Hm’well, I’m willing to take a punt that the thorny point is Redwood ranking these future “unambiguously negative implications” of taxing large wealth accumulations over and above the unambiguously negative implications of extreme inequality in the here and now. Which is to state nothing so much as “we fundamentally disagree”.
But why does this quote disprove James’ point specfically? Corporation tax, give or take a few twiddles, is a tax on profit, not capital, so it doesn’t make a lot of sense to single it out from other income taxes and say “Really, this affects capital ultimately” because the same argument could be made for personal income tax as well (unless aggregate stock of capital means something different? I am not an economist). It would appear that he singles out corporation tax and slips it in between two genuine capital taxes because his liberalism extends to both companies and wealthy individuals, and no further.
I am perfectly happy to disagree constructively!
There are a couple of assumptions that I don’t think quite hold up, though.
Firstly you seem to assume that low taxation rates and redistribution are mutually exclusive. Historically this doesn’t seem to be quite the case. For instance, when Nigel Lawson cut the top rates of tax in 1988 the richest 1% rapidly went from contributing 14% of the tax collected to around 22%.
Keeping taxes low might seem unappealing, but as JFK said it’s “the soundest way to raise the revenues in the long run”.
Secondly, I would take issue with the fact that you are implicitly correlating money with quality of life. I don’t think it is anything like as simple as that although this may be another area where we have to beg to differ.
Ah, you’ve been reading the Spectator! (wish I knew how to embed links on LDV but it was 18 September)
To clarify, first, we are talking here about capital taxes, not income tax. Lib Dem policy is to cut the basic rate of income tax by 4p and raise the higher-rate threshold to earnings of £50,000, and if I wasn’t happy with it I am sure I would have spouted my mouth off by now. So to cite the 1988 cuts on income tax rates here isn’t relevant. Capital taxes are significant because they are taxing actual accumulations of wealth, ie, wealth that is more than the sum of one individual’s working efforts. The abstract argument for keeping and refining capital taxes is the same as that for cutting income tax rates – that individuals should be rewarded for work, and that’s individuals, not dynasties.
Secondly, redistribution is meaningless unless the extra revenues collected are actually put back somewhere, so stating that revenues increase because of such and such a measure proves nothing in respect of redistribution, and the cheeky Spec blogger knows this perfectly well.
Thirdly, hm, I think you should try making your quality of life point to someone on the minimum wage. If, as I gather, you’ve been reading Layard and others, you’ll recall that while an increase in material wealth beyond a certain point does not increase happiness, a basic advancement to a minimal standard of comfort does increase it quite dramatically. By saying “extreme inequality” rather than just inequality I suppose I was referring obliquely to this. In the present instance, the Lib Dem proposal to raise the tax-free allowance to what is currently the top of the 10% band represents a substantial step towards making the national minimum wage salary tax free. This would be paid for by, amongst other things, alterations to Capital Gains Tax so that it no longer rewards people for having held on to an asset for a long time by tapering their taxable proceeds. That, my children, is redistribution.
Most supporters of axing IHT argue on the basis of property prices, not capital assets. Most the value of property is bound up with land values, not capital – this is basic, Adam Smith wealth of nations stuff we’re talking here.
Are you – and John Redwood – seriously now claiming that property can be moved across borders?
I’m all for reducing taxes on capital, but the issue I was taking him to task for was IHT and wealth taxes more generally.
Land is not capital. If Redwood don’t understand that basic point, it is no wonder no BBC journalist treats him with any respect.
The are fairly clearly two categories of assets that you need to consider for IHT; moveable and immoveable. The movable ones are likely to behave rather like income in that if you threaten to tax too highly then they will just disappear and resurface in St Hellier or similar. But of course, what causes the strife for many is the effect on the immoveable ones; houses and land basically.
Personally I would be in favour of binning IHT just because it is iniquitous; elderly sisters / unmarried couples can end up with a huge bill just to stay in the family home which marrieds/ civil partners are exempted from. IHT also encourages selfish consumerism – it is basically saying “spend it now or loose it” – over nuturing and saving.
In terms of the relationship between land an captial, if I were to inherit a 1m house (I wish!) and have to pay the Exchquer 300k or so for the priviledge it is not hard to see how the value of the property (approx 50% of which is the land value at current rates IIRC) has been effectively converted into capital from whch a chunk has been taken away. So the aggregate stock of capital is squeezed a bit. Or to put it in more human terms; if I wanted to start up a business with my inheritance I would find it that much harder.
Now onto the more interesting stuff about money vs quality of life. In fact I just use my eyes and ears although it would be nice if Mr Layard has been thinking similar thoughts. I always get a bit suspicious when people say “tell that to someone on the minimu wage”. As it happens, I have been living on well below the minimum wage (although it is cheating a bit, because like Orwell in Paris, I could always escape). My co-workers are paid well below the minimums wage (US $500 per month is tops for a postdoc in this corner of Ruskii-land and living costs aren’t half a cheap as you might think). So in fact my view is very much coloured from living in what, by UK standards, would be termed extreme poverty. And, while like all people they could happily spend more money, they don’t feel the need for it – there is a culture here of valuing a person for attributes other than his or her bank balance. Recently there has been a lot of publicity about using relative poverty as an indicator of the health of society. The argument is appealing but not, I think, correct. It is more a question of whether poverty is seen as degrading (both by the poor and the rest of society) or not.
Telling everyone they should be rich has its dangers!
As an economist (and the person who posted this article) can I intervene? Capital, to economists, is things like machinery, roads, etc. These are very useful! Capital to financiers and the tax authorities, on the other hand, is assets that yield a return. The two are not the same – as the example of a house makes clear. If you were to tax someone’s financial capital more heavily, and their labour income more lightly, they could well end up with about the same amount of money to invest. For that reason Redwood’s quote is not meaningful in economic terms. There is no reason to think that higher IHT (balanced by lower taxes elsewhere) has unambiguous implications for growth.
Whilst I have a lot of respect for my colleague Lord Layard, whose proposals on cognitative behavioural therapy I was delighted to see make it into the recent LD anti-poverty paper, I do note that he and others who assert that money does not buy you happiness are almost always affluent. Richard is no hypocrite, his point is that being poorer than your neighbours is psychologically painful, and therefore supports a more egalitarian society. But I wonder whether the poor are always quite so sure? In addition, greater absolute wealth means more money for medical research, allowing us to live longer, and more healthily. Remember, people died in the 19th century from things we can cure for 10 pence today (most obviously antibiotics).
I agree that greater absolute wealth (and, I would say, degree of civilisation in general, although this is more subjective) is of real value because of the advances it allows in health. I would add education to this too.
The argument that being poorer than your neighbours is psychologically painful leading to the conclusion that a more financially equal society is de facto better doesn’t seem to match up what I observe over here (in Russia) at all. I will freely admit to being surprised (I, like most Brits I think, would expect a correlation between poverty and unhappiness) but I simply don’t see it.
If you want to see just how ridiculous John Redwood is, read the story in the November edition of ‘Today’s Railways – UK’ (p.82) about Redwood’s report ‘Freeing Britain to Compete’.
In the section of his report on rail policy, Redwood suggests that we could run more trains on existing tracks by “introducing rubber wheels that give trains extra grip, enabling them to accelerate more smoothly and brake more quickly. By doing this on British commuter trains, the railway could run a much more effective service of 40 trains per hour, an increase in capacity of about 65%. Rubber could be introduced either in the form of additional wheels on a special running strip, or on the steel wheels.”
It turns out that among the Vulcan’s many faults is scientific illiteracy. As Today’s Railways magazine points out: “This is, of course, complete nonsense. Also, Mr Redwood obviously does not understand that the environmental benefit of rail is that the lower coefficient of friction between steel wheel and steel rail is what gives rail its energy advantage over a rubber tyre and concrete system.”
If this example is typical of the depth of Redwood’s research, why should anyone take him or his policies seriously?
The magazine goes on to point out that the Lib Dems’ more sensible transport policy, ‘Towards Carbon Free Transport’, published the same day as Redwood’s report, was ignored by the media.